Move over, fixed fees — utilities see demand charges as revenue cure

Demand-based charges normally reserved for big industrial users could also be applied to residential customers if an Illinois utility gets its way in the state legislature.

Demand charges bill customers based on the maximum amount of electricity they use in one short time period during each billing cycle. The analogy of a pipe is often used – utilities say what matters is the width of the “pipe” needed for the highest volume of delivery at one moment, not the total volume over time.

Such charges have long been common for large industrial and commercial customers, and a number of utilities nationwide offer opt-in demand charges to residential customers.

ComEd, which serves northern Illinois, would be the first major utility to institute mandatory demand charges for all customers, if the legislation passes and is implemented as experts predict.